Krajewski TIF Chapter 11

Chapter 11 Location
Chapter
11 Location
TRUE/FALSE
1. If the customer must be physically present at the process, location is an important issue.
Answer: True
Reference: Introduction
Difficulty: Easy
Keywords: location, physical, presence, customer
2. Secondary location factors are derived from competitive priorities.

Answer: False
Reference: Factors Affecting Location Decisions
Difficulty: Moderate
Keywords: secondary, location, factor
3. One dominant factor in locating manufacturing facilities is a favorable labor climate.

Answer: True
Keywords: labor, climate, factor
4. When outbound transportation costs are a dominant factor, manufacturing facilities should be located
close to suppliers and resources.
Answer: False
Keywords: transportation, cost, outbound
5. Traffic flows are one dominant factor in manufacturing location.

Answer: False
Keywords: traffic, flow, location
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6. Service location decisions are driven primarily by the operating costs at the locations under
consideration.
Answer: False
Keywords: service, location, cost, revenue
7. Critical mass is a situation whereby several competing firms clustered in one location attract more
customers than the total number who would shop at the same stores in scattered locations.
Answer: True
Difficulty: Easy
Keywords: critical, mass, customers
8. A geographic information system contains demographic information.

Answer: True
Reference: Geographic Information Systems and Location Decisions
Difficulty: Easy
Keywords: GIS, geographic, information, system, demographic
9. Repeated onsite expansion ultimately leads to diseconomies of scale.

Answer: True
Reference: Choosing Between an Onsite Expansion, New Location, or Relocation
Keywords: onsite, expansion
10. More than 80 percent of all relocations are within 20 miles of the first location, so usually the existing
workforce is displaced.
Answer: True
Keywords: relocation, workforce, displace
11. The center of gravity method considers a greater number of factors than the break-even analysis.
Answer: False
Reference: Locating a Single Facility
Difficulty: Easy
Keywords: center, gravity, break-even
12. A decision maker using break-even analysis must assume that suppliers do not provide discounts for
large orders.
Answer: True
Keywords: break-even
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13. Break-even analysis can help a manager compare location alternatives on the basis of quantitative
factors that can be expressed in terms of total cost.
Answer: True
Keywords: break, even
14. When a firm with a network of existing facilities plans a new facility, the new facility is assumed to
operate independently of the existing ones.
Answer: False
Reference: Locating a Facility Within a Network of Facilities
Keywords: facility, network
15. The transportation method provides optimal solutions for minimization of shipping costs in multiple
facility location problems.
Answer: True
Keywords: transportation, shipping
16. A dummy plant is one that cannot meet customer demands regardless of the number of locations.
Answer: False
Keywords: dummy, plant
17. Simulation is a procedure used to determine the “best” solution that generally uses simplified and less
realistic views of a problem.
Answer: False
Keywords: simulation, assumption
MULTIPLE CHOICE
18. The group of location factors found to be most important for new manufacturing plants, on the
average, is:
a. proximity to markets.
b. quality of life.
c. proximity to suppliers and resources.
d. favorable labor climate.
Answer: d
Keywords: location, factors, climate
19. A favorable labor climate might include:

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a. a poor work ethic.

b. no union presence.
c. high average wages.
d. an uneducated work force.
Answer: b
Keywords: labor, climate
20. Quality of life issues include:

a. proximity to markets.
b. prevailing wage rates.
c. local and state taxes.
d. recreational facilities.
Answer: d
21. Which of the following location factors was NOT found to dominate location decisions for new U.S.
manufacturing plants?
a. Proximity to the parent company’s facilities
b. Quality of life
c. Proximity to competitors’ facilities
d. Favorable labor climate
Answer: c
Keywords: location, factor
22. Which of the following statements about locating new U.S. manufacturing plants is best?
a. A favorable labor climate is the most important factor for capital-intensive plants.
b. Labor climate is a function of wage rates, training requirements, attitudes toward work, worker
productivity, and union strength.
c. Locating near markets is less important when the finished goods are bulky or heavy and outbound
transportation rates are high.
d. The shift of new industrial jobs to nonurban regions experienced in the United States is not taking
place in Japan and Europe.
Answer: b
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23. Which of the following statements about locating new U.S. manufacturing plants is best?
a. General Motors Corporation located its new plant to manufacture the Saturn car in Detroit,
primarily because of proximity to current suppliers and many of its other facilities.
b. Industries dependent on inputs of bulky, perishable, or heavy raw materials emphasize proximity to
markets.
c. Quality of life means good schools, recreational facilities, cultural events, and an attractive
lifestyle.
d. Locating large, high-volume facilities offshore that are focused on a particular product and market
is the best way to deal with the uncertainties of nontariff barriers such as political risks, regional
trading blocks, and exchange rates.
Answer: c
Keywords: quality, life
24. Which of the following statements about locating facilities in the service sector is best?
a. The factors that apply to manufacturing firms often also apply to service facilities, but the impact
of the location on sales and customer satisfaction is an important addition.
b. Management should avoid locating facilities where competitors are already well established, as
illustrated by new car showrooms.
c. Creating a critical mass is a strategy that avoids locating near competing firms.
d. “Site specific” factors are the main reason for locating warehousing and distribution operations
near the customer.
Answer: a
Keywords: locating, service, facility
25. Which of these is NOT identified as a component of a geographical information system?

a. Hardware
b. Data
c. Software
d. Network
Answer: d
Reference: Geographical Information Systems and Location Decisions
Keywords: GIS, geographical, information, system
26. Which of these is NOT a common functionality of a GIS?

a. Data storage
b. Communication
c. Map display
d. Modeling
Answer: b
Keywords: GIS, geographical, information, system
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27. Which of the following usually is an advantage of on-site expansion, compared to building a new
facility?
a. Reduced construction time and costs
b. Focused facility
c. Simplified production control
d. Reduced transportation cost
Answer: a
Reference: Choosing Between and Onsite Expansion, New Location, or Relocation
Keywords: expansion, new, facility
28. Most firms that choose to relocate operations have:

a. more than 500 employees.
b. more than 100 employees but fewer than 500 employees.
c. more than 10 employees but fewer than 100 employees.
d. fewer than 10 employees.
Answer: d
Keywords: expansion, new, facility
29. Which one of the following is usually an advantage of building a new facility, compared to on-site
expansion?
a. Reducing construction time and costs
b. Keeping management together
c. Reducing transportation costs
d. Not splitting up operations
Answer: c
Keywords: new, facility, expansion
30. Which of the following statements about company relocations is best?

a. Less than 80 percent of all relocations are made within 20 miles of companies’ original locations.
b. More than 80 percent of all relocations are made within 20 miles of companies’ original locations.
c. More than 20 percent of all relocations are made within 8 miles of companies’ original locations.
d. Less than 20 percent of all relocations are made within 80 miles of companies’ original locations.
Answer: b
Keywords: new, facility, expansion
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31. Widgets, Inc. wishes to locate two new manufacturing facilities. Based on the following subjective criteria,
where should the new facilities be located? (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor = 1)
a. B and D
b. A and D
c. C and D
d. D and E
Answer: b
Keywords: location, factors
32. McKenna Restaurant wishes to open a new store. Based on the following subjective criteria, where 10
is excellent and 0 is poor, where should the new store be located?
a. A
b. B
c. C
d. D
Answer: c
Keywords: location, factors, weighted
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33. The point has been reached where a biotechnology research and development company must expand
by building a new facility. The search has been narrowed to four locations, all of which are acceptable
to management. The assessment of these sites is being made on the basis of the six subjective location
factors that follow. Management has agreed to use a five-point scale (Excellent = 5, Very good = 4,
Good = 3, Fair = 2, Poor = 1) to quantify and compare their subjective opinions about the relative
goodness of the sites. The weight reflects the importance of each factor in the decision.
Calculate the weighted score for each alternative. Which location would you recommend?
a. A
b. B
c. C
d. D
Answer: c
Keywords: location, factors, weighted
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34. A company desires to locate a new facility. Based on preliminary analysis, the choice has been
reduced to four locations: A, B, C, and D. These four locations were rated on a scale from 1 (worst) to
10 (best) on each of four criteria. Each criterion was also weighted to indicate its importance (i.e., the
higher the weight, the more important). The list of ratings and weights follows.
Based on weighted scores, where should the company locate its new facilities?
a. A
b. B
c. C
d. D
Answer: a
Keywords: weighted, score, location
35. Sweet Candy, Inc. wishes to open two new stores. Based on the following subjective criteria, where
should the new stores be located? The higher the score, the better.
Factor Score Evaluation by Location

Factor Weight A B C D E
Markets 35 4 3 5 4 5
Transportation 25 3 5 3 3 2
Labor Climate 20 5 5 2 3 5
Taxes 15 2 4 4 5 2
Quality of life 5 3 4 5 4 5
a. A and B
b. B and C
c. B and D
d. B and E
Answer: d
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36. The Hunan Restaurant wishes to locate a new facility. Based on the following subjective criteria,
where should the new facility be located? (Very good = 5, Good = 4, Fair = 3, Poor = 2, and Very
poor = 1)
a. A
b. B
c. C
d. D
Answer: b
37. A quantitative method used to evaluate single locations based primarily on proximity is:
a. break-even analysis.
b. the transportation method.
c. a preference matrix.
d. the load-distance method.
Answer: d
Keywords: load-distance, load, distance
38. A quantitative method used to evaluate multiple locations based on total cost of production or service
operations is called:
a. break-even analysis.
b. the transportation method.
c. a preference matrix.
d. the load-distance method.
Answer: a
Keywords: break-even, break, even
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39. Four departments are located in adjacent bays in the same loading dock. The distance between
adjacent bays is 30 feet, the distance between bays separated by another (Alpha and Charlie, Bravo
and Delta) is 60 feet, and the distance between Alpha and Delta is 90 feet. Use the information in the
table to calculate the load distance for location Alpha.
To To To To
From Alpha Bravo Charlie Delta
Alpha 0 15 20 30
Bravo 5 0 12 8
Charlie 10 7 0 4
Delta 15 24 6 0
a. 2100
b. 6450
c. 4350
d. 2250
Answer: b
table to calculate the load distance for location Bravo.
To To To To
Alpha 0 15 20 30
Bravo 5 0 12 8
Charlie 10 7 0 4
Delta 15 24 6 0
a. 3090
b. 3300
c. 2100
d. 1200
Answer: a
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table to calculate the total load distance for this layout.
To To To To
Alpha 0 15 20 30
Bravo 5 0 12 8
Charlie 10 7 0 4
Delta 15 24 6 0
a. 3930
b. 18480
c. 9240
d. 12660
Answer: c
Table 11.1
A single facility is needed to meet the demands of four markets. The locations and demands of
these four markets are shown below.
42. Use the information from Table 11.1. What are the x and y coordinates for the center of gravity?
a. x > 6, y > 7
b. x > 6, y < 7
c. x < 6, y > 7
d. x < 6, y < 7
Answer: c
Keywords: center, gravity
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Table 11.2
Durham Toy, Inc. has five distribution centers at the location coordinates given as follows. The
monthly demand at each center is also given.
43. Use the information in Table 11.2. What are the x and y coordinates for the center of gravity?
a. x > 14, y > 15
b. x < 14, y > 15
c. x <14, y < 15
d. x > 14, y < 15
Answer: a
44. Use the information in Table 11.2. If the plant is located at the center of gravity, what is the load–
distance score, assuming rectilinear distance?
a. Less than or equal to 1500
b. More than 1500 but less than or equal to 1600
c. More than 1600 but less than or equal to 1700
d. More than 1700
Answer: c
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45. Consider the location of four distribution centers, A, B, C, and D, with the following location
coordinates and shipping requirements per week.
Management is considering locating a new plant at the site of one of the four distribution centers.
What is the load–distance score if the plant is located at distribution center A? (Use rectilinear
distance.)
b. Greater than 4500 but less than or equal to 5000
c. Greater than 5000 but less than or equal to 5500
d. Greater than 5500
Answer: a
46. Pinkerton Company has four distribution centers located at the location coordinates given. The
monthly demand at each center is also given.
Assume that management is considering locating its new plant at distribution center A. What is
the load–distance score, assuming rectilinear distance?
a. Less than 33,000
b. Greater than 33,000 but less than 33,500
c. Greater than 33,500 but less than 34,000
d. Greater than 34,000
Answer: b
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47. A single facility is needed to meet the demand of four regions depicted as follows:
If the plant is located at A, what is the total load–distance score, assuming Euclidean distance?
d. More than 1200
Answer: a
Table 11.3
A firm has the following demand forecasts for the five markets that it serves:
48. Use the information in Table 11.3. What is the center of gravity?
a. x < 7, y < 8
b. x > 7, y < 8
c. x < 7, y > 8
d. x > 7, y > 8
Answer: c
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49. Use the information in Table 11.3. If the firm decides to locate the warehouse at point D, what is the
total load–distance score? (Use rectilinear distance.)
a. Less than 400
b. Between 401 and 450
c. Between 451 and 500
d. More than 500
Answer: a
Keywords: load, distance, rectilinear
Table 11.4
A company has determined the “demand points” and their relative locations as follows:
50. Use the information in Table 11.4. If a company desires to locate a manufacturing facility at the
center of gravity, what would be the x and y coordinates of the facility?
a. x < 14, y < 14
b. x < 14, y > 14
c. x < 15, y < 14
d. x < 15, y > 15
Answer: c
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51. Use the information in Table 11.4. If a facility were to be located at (15,15), what would be the load–
distance score? (Assume rectilinear distance.)
d. More than 6500
Answer: b
Table 11.5
Union Fork, Inc. has five distribution centers located at the location coordinates given as
follows. The demand at each center is also given.
a. x > 7.5, y > 6
b. x > 7.5, y < 6
c. x < 7.5, y > 6
d. x < 7.5, y < 6
Answer: b
53. Use the information in Table 11.5. If a plant is located at a center of gravity, what is the load–distance
score, assuming rectilinear distance?
d. More than 600
Answer: d
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54. Use the information in Table 11.5. Assume that two plants, rather than one, are to be located. Plant 1
serves distribution centers A, B, and C. Plant 2 serves distribution centers D and E. What is the center
of gravity for plant 1?
a. x > 4, y > 7
b. x > 4, y < 7
c. x < 4, y > 7
d. x < 4, y < 7
Answer: b
55. Use the information in Table 11.5. What is the total load–distance score for the two plants if Plant 1 is
located at the center of gravity serving distribution centers A, B, and C, and Plant 2 is located at the
center of gravity serving D and E? (Assume rectilinear distance.)
d. More than 400
Answer: b
Difficulty: Hard
56. Use the information in Table 11.5. What is the total load–distance score for the two plants if Plant 1 is
located at the center of gravity serving A, B, and C, and Plant 2 is at the center of gravity serving D
and E? (Assume Euclidean distance.)
d. More than 280
Answer: c
Difficulty: Hard
Keywords: load, distance, Euclidean
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57. Malhotra Company has four distribution centers located at the location coordinates given as follows.
The monthly demand at each center is also given.
Management wants to build a new plant that would be located at the center of gravity of the four
distribution centers. Which of the following options best represents the coordinates of the new
plant location?
a. X coordinate is greater than 150 but less than 170; y coordinate is greater than 210 but less than
230.
b. X coordinate is greater than 150 but less than 170; y coordinate is greater than 230 but less than
250.
c. X coordinate is greater than 170 but less than 190; y coordinate is greater than 210 but less than
230.
d. X coordinate is greater than 170 but less than 190; y coordinate is greater than 230 but less than
250.
Answer: d
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58. Kiddie Clothes wishes to locate its warehouse so that it would serve its four different stores,
described as follows. Based on the center of gravity, what are the x and y coordinates of the proposed
warehouse location?
a. X is less than or equal to 3; y is less than or equal to 2.

b. X is less than or equal to 3; y is less than or equal to 2.5.
c. X is greater than or equal to 2.5; y is greater than or equal to 3.
d. X is less than or equal to 2.5; y is greater than or equal to 2.9.
Answer: d
59. Bill Burns, district manager of the Pizza Palace, wishes to locate a new store in the metropolitan
areas. Using the following information, what are the x and y coordinates for the center of gravity?
Don’t round up or down your answer before making your choice.
Demand x coordinate y coordinate

Market
(pizzas/day)
Grandview Heights 250 2 2
Upper Arlington 100 4 5
Bexley 150 7 3
Worthington 350 4 9
Medfield 500 4 3
a. X is less than or equal to 4; y is less or equal to than 4.5.

b. X is greater than or equal to 5; y is greater than or equal to 3.5.
c. X is less than or equal to 3.5; y is less than or equal to 4.5.
d. X is less than or equal to 4; y is greater than or equal to 4.5.
Answer: d
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60. A national drugstore chain prefers to operate one outlet in a town that has four major market
segments. The number of potential customers in each segment, along with the location coordinates,
are given below.
Which would be the best location using the center of gravity method?
a. x > 10, y < 5
b. x < 10, y > 5
c. x < 9, y < 6
d. x < 11, y > 8
Answer: b
61. A grower and shipper of fresh gourmet herbs has determined the following demand forecast for the
five metropolitan markets that the firm serves. Based on your calculations of the center of gravity,
where should the new herb farm be located?
a. x < 5, y > 5
b. x < 7, y > 6
c. x < 6, y >6
d. x > 6, y > 8
Answer: d
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Table 11.6
Nuts-and-Bolts, Inc. wishes to find the best location for a plant that will satisfy customer
demand in the following five areas.
x y
Location coordinate coordinate Volume
A 3 1 35
B 5 0 90
C 8 7 15
D 2 3 20
E 5 4 55
a. x > 9, y > 14
b. x > 4.6, y < 2
c. x < 4, y > 2
d. x < 9, y < 6
Answer: b
63. Use the information in Table 11.6. If the plant is located at the coordinates (5, 5), what is the total
load–distance score, assuming rectilinear distance?
a. Less than 400
b. 400–550
c. 551–700
d. More than 700
Answer: d
64. Use the information in Table 11.6. If the plant is located at the coordinates (5, 5), what is the total
load–distance score, assuming Euclidean distance?
a. Less than 400
b. 400–550
c. 551–700
d. More than 700
Answer: d
Keywords: Euclidean, center, gravity
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65. An operations manager has narrowed down the search for a new plant to three locations. Fixed and
variable costs follow.
Location Fixed Cost Variable Cost

A $100,000 $10
B $150,000 $7
C $200,000 $5
Plot the total cost curves in the chart provided and identify the range over which each location
would be best. Then use break-even analysis to calculate exactly the break-even quantity that
defines each range.
Which of the following statements is correct?

a. Location C is the best one if volumes are quite low.
b. Location A becomes the most expensive place to produce at volumes in excess of 2000.
c. The break-even quantity between A and B is less than or equal to 500 units.
d. The break-even quantity between C and B is more than 3000 units.
Answer: b
Keywords: break, even, break-even
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A $100,000 $10
B $150,000 $7
C $200,000 $5
defines each range.

a. By inspection, it is apparent that at least two different sites will be the best places to produce at
dramatically different output volumes.
b. Location A becomes the most expensive place to produce at volumes in excess of 1500.
Answer: a
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variable costs follow:

A $100,000 $10
B $150,000 $7
C $200,000 $5
defines each range.

a. Location C is the best one if volumes are quite low.
b. Location A becomes the most expensive place to produce at volumes less than 2000.
Answer: c
68. Which of the following statements about linear break-even analysis is incorrect?
a. No start-up costs exist.
b. No economies of scale can be achieved.
c. Variable costs vary as output changes.
d. Fixed costs vary as output changes.
Answer: d
Keywords: break, even, breakeven
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69. Excel Products is planning a new warehouse to serve the Southeast. Locations A, B, and C are under
consideration. Fixed and variable costs follow.
would be best. Then use break-even analysis as necessary to calculate exactly the break-even
quantity that defines each range.

a. Location A is the best one if volumes are quite high.
b. Location B is best over all volume levels.
c. The total cost of location A, if the volume is 250,000 units, is over $7,000,000.
d. The break-even quantity between A and B is more than 75,000 units but fewer than 200,000 units.
Answer: b
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Table 11.7
Sagebrush Company has four warehouses (A, B, C, and D) that require monthly shipments of
250, 200, 300, and 200 units per month, respectively. Its three plants (1, 2, and 3) have monthly
capacities of 300, 400, and 250, respectively. Shipping costs (in $) follow. A blank transportation
method tableau is provided below.
70. Use the information in Table 11.7. What can be said about a plan that ships 200 units from 1 to A,
100 units from 1 to B, 100 units from 2 to B, 300 units from 2 to C, and 250 units from 3 to D?
a. It is not feasible in terms of plant capacities.
b. It is not feasible in terms of satisfying warehouse demands.
c. It is feasible, but not the least-cost allocation pattern.
d. It is the optimal solution.
Answer: b
Keywords: transportation, method
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71. Use the information in Table 11.7. Which of these statements regarding the problem is correct?
a. Another plant must be added to the tableau because there are more warehouses than plants.
b. A dummy plant must be added due to production volumes.
c. A dummy warehouse must be added due to demands.
d. The simplex method can be used to solve this problem.
Answer: d
Keywords: simplex, transportation, method
72. Use the information in Table 11.7. What is the cost of a plan that ships 150 units from 1 to C, 150
units from 1 to D, 250 units from 2 to A, 150 units from 2 to C, 200 units from 3 to B, and 50 units
from 3 to D?
a. Less than $15,000
b. More than $15,000 but less than $16,000
c. More than $16,000 but less than $17,000
d. More than $17,000
Answer: a
Table 11.8
The Neale Company has four distribution centers (A, B, C, and D) that require monthly
shipments of 30,000, 24,000, 36,000, and 24,000 gallons of diesel fuel per month, respectively.
Three wholesalers (1, 2, and 3) are willing to supply up to 36,000, 48,000 and 30,000 gallons,
respectively. Total costs (in $) for both shipping and price follow. A blank transportation
method tableau is provided below.
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73. Use the information in Table 11.8. Which of the following statements about this scenario is incorrect?
a. A dummy warehouse is required to complete the analysis.
b. It costs $2 per gallon to ship between Wholesaler 3 and Distribution Center D.
c. It costs $2 per gallon to ship one gallon from Wholesaler 3 to Distribution Center D.
d. It costs $2 per gallon to ship 20,000 gallons from Wholesaler 3 to Distribution Center D.
Answer: a
Keywords: dummy, transportation, method
74. Use the information in Table 11.8. What can be said about a plan that ships 18,000 gallons from 1 to
C; 18,000 gallons from 1 to D; 30,000 gallons from 2 to A; 18,000 gallons from 2 to C; 24,000
gallons from 3 to B; and 30,000 from 3 to D?
a. It is not feasible in terms of wholesaler availabilities.
b. It is not feasible in terms of satisfying distribution center demands.
c. It is feasible, and the total monthly cost is less than $223,000.
d. It is feasible, and the total monthly cost is greater than $227,000.
Answer: a
75. Use the information in Table 11.8. What can be said about a plan that ships 30,000 gallons from 1 to
A; 6,000 gallons from 1 to C; 24,000 gallons from 2 to B; 24,000 gallons from 2 to D; and 30,000
gallons from 3 to C?
a. It is not feasible in terms of wholesaler availabilities.
c. It is feasible, and the total monthly cost is less than or equal to $260,000.
d. It is feasible, and the total monthly cost is greater than $260,000.
Answer: c
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76. A company makes products at four different plants and ships them to four different
distribution centers. The cost of shipping a single unit between each combination of plant and
distribution center is shown in the table. The capacity of each plant and demand for each
distribution center is also displayed for your calculating pleasure. What is the total cost for
the optimal solution?
Z Y X W Supply
A $6 $9 $12 $14 500
B $9 $1 $5 $8 450
C $6 $8 $4 $5 375
D $9 $14 $15 $8 400
Demand 750 225 325 425
a. $9,575
b. 10,455
c. $9,850
d. $10,780
Answer: a
77. A company makes products at four different plants and ships them to four different distribution
centers. The cost of shipping a single unit between each combination of plant and distribution center
is shown in the table. The capacity of each plant and demand for each distribution center is also
displayed for your calculating pleasure.
Z Y X W Supply
A $6 $9 $12 $14 500
B $9 $1 $5 $8 450
C $6 $8 $4 $5 375
D $9 $14 $15 $8 400
Demand 750 225 325 425
The logistics division decides to ship product as shown in the table.
Z Y X W Supply
A 500 500
B 225 225 450
C 250 100 25 375
D 400 400
Demand 750 225 325 425
Which of the following moves results in an equivalent total cost once the table is rebalanced?
a. Shipping 100 units from C to Y
b. Shipping 25 units from B to W
c. Shipping 100 units from D to X
d. Shipping 250 units from D to Z
Answer: d
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78. Having failed to lose money producing Springtime For Hitler in Germany, Max Bialystock and Leo
Bloom embark on logistics management service for wealthy widows. They design the worst
distribution system possible for a company that makes products at four different plants and ships
them to four different distribution centers. The cost of shipping a single unit between each
combination of plant and distribution center is shown in the table. The capacity of each plant and
demand for each distribution center is also displayed for your calculating pleasure. What is the total
cost for the worst solution?
Zero Gene Ken Mel Supply
Nate $6 $9 $12 $14 500
Matt $9 $1 $5 $8 450
Will $6 $8 $4 $5 375
Uma $9 $14 $15 $8 400
Demand 750 225 325 425
a. $21,375
b. 18,485
c. $19,150
d. $15,820
Answer: c
79. Which of the following statements about dummy locations is correct?

a. Only a source can be represented as a dummy.
b. Only a destination can be represented as a dummy.
c. Dummy locations are assigned a dollar cost per unit shipped.
d. Dummy locations are assigned a very high (infinite) cost per unit shipped, so no actual product is
assigned to that grid point.
Answer: c
Keywords: dummy, cost
80. Which of the following is NOT a step in setting up a transportation tableau?

a. Create a row for each plant being considered.
b. Remove the lowest and highest cost intersections from consideration.
c. Create a column for each warehouse being considered.
d. Add a column and a row for plant capacities and total demands.
Answer: b
Keywords: transportation, method, tableau
331
81. Which of the following invalidates any analysis using the transportation method?
a. Unequal supply and demand amounts
b. More sources than destinations
c. More destinations than sources
d. Lack of a linear increase in shipping costs
Answer: d
82. The Nelson Company has four distribution centers (A, B, C, and D) that require shipments of 20, 30,
40, and 10 units per week, respectively. Its three plants (1, 2, and 3) have monthly capacities of 40,
30, and 30, respectively. Shipping costs (in $) follow.
What can be said about a plan that ships 40 units from 1 to C, 30 units from 2 to B, 20 units from
3 to A, and 10 units from 3 to D?
a. It is not feasible in terms of plant capacities.
c. It is feasible, and the weekly shipping cost is less than $1,600.
d. It is feasible, and the weekly shipping cost is greater than $2,000.
Answer: c
Difficulty: Hard
332
83. A rule of thumb, or guideline, is also known as a(n):

a. heuristic.
b. simulation.
c. optimization.
d. model.
Answer: a
Keywords: heuristic, guideline, thumb
84. A procedure used to determine the best solution is also known as a(n):
a. heuristic.
b. simulation.
c. optimization.
d. model.
Answer: c
Keywords: optimization, procedure, best
85. A modeling technique that reproduces the behavior of a system is known as a(n):
a. heuristic.
b. simulation.
c. optimization.
d. model.
Answer: b
Keywords: simulation, modeling, system, behavior
86. Which one of the following statements about heuristics is best?

a. Because heuristics are efficient, they do not need the computer.
b. In general, heuristics handle less-realistic views of the problem than optimization methods.
c. Heuristics do not necessarily find the best solution.
d. The transportation method was one of the first heuristics developed for solving location problems.
Answer: c
Keywords: heuristic, solution
333
FILL IN THE BLANK
87. ____________ is the process of determining a geographic site for a firm’s operations.
Answer: Facility location
Reference: Introduction
Keywords: geographic, site, location
88. ____________ is a function of wage rates, training requirements, attitudes toward work, worker
productivity, and union strength.
Answer: Labor climate
89. ____________ is a strategy by which several competing firms cluster in one location to attract more
customers than the total who would shop at the same stores at scattered locations.
Answer: Critical mass
Keywords: critical, mass
90. A(n) ____________ is a system of computer hardware, software, and data that the firm’s personnel
can use to manipulate, analyze and present information relevant to a location decision.
Answer: geographical information system (GIS)
Difficulty: Easy
Keywords: geographical, information, system, GIS
91. ____________ has the advantage of keeping people together, reducing construction time and costs,
and avoiding splitting up operations.
Answer: Onsite expansion
Keywords: onsite, expansion
92. A preference matrix is used to incorporate ____________ like community attitudes and quality of life
into a location analysis.
Answer: qualitative factors
Difficulty: Easy
Keywords: qualitative, preference, matrix
334
93. The objective of the load–distance method is to minimize the ____________ into and out of the
facility.
Answer: total weighted loads
Keywords: load, distance
94. A(n) ____________ is a standard matrix that is used to solve location problems using the
transportation method.
Answer: tableau
Keywords: tableau, transportation, location
95. ____________ is a modeling technique that reproduces the behavior of a system.

Answer: Simulation
Keywords: simulation, modeling
96. A(n) ____________ is a solution guideline, or rule of thumb, that finds feasible—but not necessarily
the best—solution to a problem.
Answer: heuristic
Keywords: heuristic, guide, thumb
SHORT ANSWERS
97. List four of the six dominant factors in locating manufacturing facilities, as discussed in the book.
Answer: Choices include favorable labor climate; proximity to markets; quality of life; proximity
to supplies and resources; proximity to parent company facilities; and utility, tax, and real estate
costs.
Keywords: location, factors
98. You have the world’s most powerful geographic information system at your disposal as you make
your location decision. Using a manufacturer or service business of your choosing, explain what
databases you would mine and how you would arrive at a decision.
Answer: Answers will vary.
Keywords: GIS, geographical, information, systems
335
99. What are the trade-offs among on-site expansion, new location, and relocation?
Answer: The advantages of building a new location or moving are that the firm does not have to
rely on production from a single plant, can hire new labor, can modernize with new technology,
and can possibly reduce transportation costs. On-site expansion has the advantage of keeping
management together, reducing construction time and costs, and avoiding the split-up of
operations.
Keywords: expansion, new, location, relocation
100. Pick any three methods of making a single facility location decision; rank them according to the
scope of factors considered, and explain your reasoning.
Answer: The methods discussed in the text for making a single facility location decision (listed
in order of increasing scope) are the center of gravity method, the load distance method, break-
even analysis, and a weighted score using a preference matrix. Both the center of gravity and the
load distance methods consider only transportation costs (or load) by factoring the number of
trips (or volume of material transported) and the distance between the potential site. The break-
even method considers both fixed and variable costs for a site, transportation being one
component of the variable cost. Break-even analysis also considers the cost of site acquisition,
utilities, labor, raw materials, and other factors that might vary among sites under consideration.
The weighted score method using a preference matrix considers all factors that break-even
analysis includes, plus any qualitative factors that the decision maker deems important. Factors
such as climate, growth potential, labor skill, attractiveness, and others can be included in the
analysis by assigning a weight to each factor and a score to each site for each factor.
Keywords: break-even, load, distance, center, gravity, preference, matrix
101. Which of the location decision tools is the most objective and can be used by the greatest number of
decision makers to arrive at the same site decision? Which of the location decision tools would result
in the least consistent choice when used by different decision makers? Explain your reasoning.
Answer: Answers will vary.
Reference: Locating a Single Facility/Locating a Facility Within a Network of Facilities
Keywords: break-even, load, distance, center, gravity, transportation, simulation, GIS, heuristic
102. What are the differences between heuristics, simulation, and optimization?
Answer: Heuristics are solution guidelines, or rules of thumb, that find feasible (but not
necessarily the best) solutions to problems. Optimization is a procedure that is used to determine
the best solution, generally using simplified and less realistic views of a problem. Simulation is a
modeling technique that reproduces the behavior of a system; it works by trial and error.
Depending on the skill of the modeler, it may handle more realistic views of a problem than a
closed-form optimization technique.
Keywords: transportation
336
103. What is the purpose of the transportation method and what assumptions does it require?
Answer: The transportation method is a quantitative approach that can help solve multiple
facility location problems. Specifically, it optimizes (minimizes) the cost of shipping products
from two or more plants or sources of supply to two or more warehouses or destinations. The
transportation method requires that the sum of capacities equal the sum of demands. Costs are
also assumed to increase linearly with the size of the shipment; that is, the cost is the same per
unit regardless of the size of the total shipment.
PROBLEMS
104. A manufacturer’s research and development center must expand by building a new facility. The
search has been narrowed to five locations, all of which are acceptable to management. The
assessment of these sites is being made on the basis of the five subjective location factors that follow.
Management has agreed to use a five-point scale (Excellent = 5, and Poor = 1) to quantify and
compare their subjective opinions about the relative goodness of the sites. The weight reflects the
importance of each factor in the decision.
Locations
Labor climate 0.30 4 2 1 4 2
Proximity to markets 0.30 5 3 3 4 4
Quality of life 0.15 1 3 2 1 5
Proximity to suppliers 0.15 2 5 3 4 3
Taxes 0.10 4 4 4 1 3
Calculate the weighted score for each alternative. Which location would you recommend?
Answer:
Locations
Labor climate 0.30 4 2 1 4 2
Proximity to markets 0.30 5 3 3 4 4
Quality of life 0.15 1 3 2 1 5
Proximity to suppliers 0.15 2 5 3 4 3
Taxes 0.10 4 4 4 1 3
Weighted score 3.55 3.10 2.35 3.25 3.30
Location A is best with a score of 3.55.

Keywords: weighted, score, factor
337
105. A company desires to locate a new facility. Based on preliminary analysis, the choice has been
reduced to four locations: A, B, C, and D. These four locations were rated on a scale from 1 (worst) to
10 (best) on each of four criteria. Each criterion was also weighted to indicate its importance (i.e., the
higher the weight, the more important). The list of ratings and weights follows.
Location
Factor Weight A B C D
Wages 0.40 7 5 3 5
Labor climate 0.35 6 5 9 5
Local regulation 0.15 3 4 3 2
Weather 0.10 2 8 6 9
Based on weighted scores, where should the company locate its new facilities?
Answer:
Location
Factor Weight A B C D
Wages 0.40 7 5 3 5
Labor climate 0.35 6 5 9 5
Local regulation 0.15 3 4 3 2
Weather 0.10 2 8 6 9
Weighted score 5.55 5.15 5.40 4.95
Location A would be the best using this method.

Keywords: weighted, score, factor
338
106. A veterinarian with a GIS plans to locate her clinic roughly in the middle of a large southwestern
farming area. The locations of the major ranches in the area and the number of head of cattle each has
are shown in the table.
Ranch Head Latitude Longitude
Lazy W 250 35.657 97.480
Cranky J 375 35.664 97.454
Wandering S 140 35.975 97.330
Rocking G 560 35.623 97.505
Sleeping B 420 35.640 97.400
Short H 330 35.680 97.350
Total Load 2075
What is the center of gravity?
Answer:
Ranch Head Latitude Head x Lat Longitude Head x Long
Lazy W 250 35.657 8914.25 97.480 24370
Cranky J 375 35.664 13374 97.454 36545.25
Wandering S 140 35.975 5036.5 97.330 13626.2
Rocking G 560 35.623 19948.88 97.505 54602.8
Sleeping B 420 35.640 14968.8 97.400 40908
Short H 330 35.680 11774.4 97.350 32125.5
Total 2075 74016.83 202177.8
Latitude = 74016.83/2075 = 35.671

Longitude = 202177.8/2075 = 97.435

Difficulty: Easy
107. A company has determined the “demand points” and their relative locations as follows:
Demand
Points X Coordinate Y Coordinate Load
A 10 11 150
B 21 18 150
C 15 12 200
D 21 15 250
Total Load 750
If a company desires to locate a manufacturing facility at the center of gravity, what would be the x and y
coordinates of the facility?
Answer:
x* = [10(150)+21(150)+15(200)+21(250)]/750 = 17.20,
y* = [11(150)+18(150)+12(200)+21(250)]/750 = 14.00
339
108. A company has determined the “demand points” and their relative locations as follows:
Demand
Points X Coordinate Y Coordinate Load
A 12 15 1000
B 22 9 450
C 16 14 750
D 14 15 550
Total Load 2750
If a company desires to locate a manufacturing facility at the center of gravity, what would be the x
and y coordinates of the facility?
Answer:
x* = [12(1000)+22(450)+16(750)+14(550)]/2750 = 15.13,
y* = [15(1000) +9(450)+14(750)+15(550)]/2750 = 13.75

109. The operations manager has narrowed down the search for a new plant to three locations. Fixed and
Fixed Costs Variable Costs
Location Per Year Per Unit
A 70,000 25
B 120,000 22
C 250,000 17
defines each range.
a. What is the break-even quantity between A and B?

b. What is the break-even quantity between B and C?
340
Answer:
900000
800000
700000
Total Cost A
600000 B
500000 C
400000
300000
10500
12000
13500
15000
16500
18000
19500
21000
22500
24000
25500
27000
28500
30000
Output Volume
A& B : B &C :
70, 000  25 x  120, 000  22 x 120, 000  22 x  250, 000  17 x
3x  50, 000 5 x  130, 000
x  16, 666.6 x  26, 000

Keywords: break-even, break, even
110. Consider the transportation tableau shown below. What is the minimum cost of transporting the
production from Ada, Bugtussle, and Choctaw to Durant, Edmond, and Foss if costs per unit are
shown at the intersections of each location?
Durant Edmond Foss Capacity
Ada 5 7 3 200
Bugtussle 3 4 4 300
Choctaw 8 6 8 200
Requirements 250 300 150
341
Answer:
The optimal tableau is:
Durant Edmond Foss Capacity
Ada 50 150 200
Bugtussle 200 100 300
Choctaw 200 200
Requirements 250 300 150
Total Cost   Unit Shipping Cost  #Units Shipped
Total Cost  50  $5  200  $3  100  $4  200  $6  150  $3  $2,900
111. A national firm has beef jerky processing facilities in Locations 1, 2, 3, and 4. They ship to central
distributors (represented as A, B, C, and D) handling four regions of the country. The per-unit
shipping costs between each possible combination of locations are shown in the following table.
A B C D
1 $5 $10 $5 $4
2 $3 $4 $4 $3
3 $8 $6 $8 $2
4 $2 $3 $5 $9
The processing facility locations are capable of monthly production (in tons) as follows:
Location 1: 600
Location 2: 350
Location 3: 475
Location 4: 850
The central distributors have firm commitments for the following quantities:
Distributor A: 650
Distributor B: 725
Distributor C: 400
Distributor D: 500
What is the lowest-cost shipping arrangement that can be made between the plant locations and
distributors and what is the annual shipping cost?
342
Answer:
The optimal tableau is:
Distributor
Facility A B C D Totals
1 175 400 25 600
2 350 350
3 475 475
4 475 375 850
Totals 650 725 400 500 2,275
Total Cost   Unit Shipping Cost  #Units Shipped

Total Cost  175  $5  475  $2  350  $4  375  $3  400  $5  25  $4  475  $2  $7, 400
343

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Chapter 11 Location

2. Secondary location factors are derived from competitive priorities.

3. One dominant factor in locating manufacturing facilities is a favorable labor climate.

5. Traffic flows are one dominant factor in manufacturing location.

8. A geographic information system contains demographic information.

9. Repeated onsite expansion ultimately leads to diseconomies of scale.

19. A favorable labor climate might include:

a. a poor work ethic.

20. Quality of life issues include:

25. Which of these is NOT identified as a component of a geographical information system?

26. Which of these is NOT a common functionality of a GIS?

28. Most firms that choose to relocate operations have:

30. Which of the following statements about company relocations is best?

Factor Score Evaluation by Location

a. X is less than or equal to 3; y is less than or equal to 2.

Demand x coordinate y coordinate

a. X is less than or equal to 4; y is less or equal to than 4.5.

Location Fixed Cost Variable Cost

Which of the following statements is correct?

Location Fixed Cost Variable Cost

Which of the following statements is correct?

Location Fixed Cost Variable Cost

Which of the following statements is correct?

Which of the following statements is correct?

79. Which of the following statements about dummy locations is correct?

80. Which of the following is NOT a step in setting up a transportation tableau?

83. A rule of thumb, or guideline, is also known as a(n):

86. Which one of the following statements about heuristics is best?

FILL IN THE BLANK

95. ____________ is a modeling technique that reproduces the behavior of a system.

Location A is best with a score of 3.55.

Location A would be the best using this method.

Latitude = 74016.83/2075 = 35.671

Reference: Locating a Single Facility

Reference: Locating a Single Facility

a. What is the break-even quantity between A and B?

Reference: Locating a Single Facility

1 175 400 25 600

4 475 375 850

Totals 650 725 400 500 2,275

Total Cost   Unit Shipping Cost  #Units Shipped

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